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TMI Blog2007 (9) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... .5.2006. 2. The relevant facts that arise for consideration are that the appellant company is a manufacturer of pharmaceutical goods falling under Chapter 30 of the Central Excise Tariff Act, 1985. The appellant purchased input "Fruit Flavour Mix" (FFM) from M/s Quest International India Ltd. Investigation was carried out by the officers of Directorate General of Central Excise Intelligence on M/s Quest International India Ltd. and they came to the conclusion that the said firm ought not to have paid duty on their product FFM as it contained 44% ethyl alcohol. On a follow up actions, the officers visited the premises of the current appellant and they found that the appellant is mainly manufacturer of medicament i.e. 'Polybion Vitamin B Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be chargeable to duty under Central Excise Act. The ld. adjudicating authority after considering all the submissions made by the appellant before her, confirmed the demand and also imposed equal amount of penalty, besides ordering for recovery of interest and also imposed penalty on the Managing Director of the company. Hence these appeals by the assessee. 3. Ld. Advocate appearing on behalf of the appellant submits that during the relevant period, the appellant had vehemently pleaded that the product 'Polybion Vitamin B Complex Syrup' was classifiable under Chapter 30 of the Central Excise Tariff Act, 1985 and was dutiable. He submits that since they were manufacturing this product under lone licence agreement from M/s Cradel Pharmaceu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Commissioner of Central Excise, Ludhiana vs. Perfect Synthetics as reported at 2006 (206) ELT 71 (P&H). 4. Ld. SDR submits that the appellant should not have classified their product 'Polybion Vitamin B Complex Syrup' under Chapter 30 of the Central Excise Tariff Act, 1985 as dutiable. He submits that they were aware that the said product washaving ethyl alcohol amd, it was not covered under Central Excise Tariff Act as per the Chapter Note 4 of the Chapter 30 of the said Tariff Act. It is his submission that in order to avail the benefit of Cenvat credit paid on the inputs, the appellant had misclassified the product and availed the Cenvat credit on the inputs. It is his submission that the said credit on the inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate rate of duty. The said classification was filed by the appellant to the authorities. No where in the impugned order or in the records it is indicated that the appellant had knowledge that the said product i.e. 'Polybion Vitamin B Complex Syrup' is excluded by Chapter Note 4 of Chapter 30 of Central Excise Tariff Act, 1985. It is evident from the fact that the revenue authorities themselves drew the sample of 'Polybion Vitamin B Complex Syrup' and conducted the test as regards the alcohol content and found that the alcohol content of the product is 0.26%. This would indicate that even revenue officers were not aware that the said final product had alcohol content. We find force in the contention of the ld advocate for the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7A(1) shows that the terminology used therein is 'paid' and not 'payable'. This distinction, in out opinion, is important because it indicates that we have to take into account the factual state of affairs. In other words, we have to consider whether the duty has actually been paid on the raw material and not whether duty was payable or not. In the present case, it is not in dispute that the assessee's supplier in fact that paid the duty on the raw materials supplied to the assessee and the department accepted this excise duty. The concept of Modvat is that if the raw material suffered duty then relief should be given so far as the excise duty on the final product is concerned. For instance, if a manufacturer of coat purchases cloth on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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